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Third Industrial Revolution Consulting Group will increase both the resilience and vitality of the national economy. As a specific example, Luxembourg now imports an estimated 97 percent of its total energy requirements. In the different energy scenarios characterized in the Energy section of the master plan, the most cost-effective future energy scenario is the one that increases the local production of electricity energy to 70 percent within Luxembourg. Using a thought experiment, we can imagine how building up greater local capacity and energy supply from 3 percent to 70 percent can increase the robustness of the Luxembourg economy. For example, we can use a multiplier formula of [1 / (1 – 0.03)] to suggest a base economic multiplier of 1.03 for each euro spent by businesses and consumers for their overall energy needs. But if the TIR master plan moves the local purchase coefficient from 3 percent to as much as 70 percent, as suggested, then the base multiplier for energy increases to 3.33. In other words, instead of a €100 consumer purchase for average energy needs that initially might support €103 in regional activity, under the TIR master plan it would support more like €333, without incurring other additional costs to the economy. This is clearly a cost-effective improvement in well-being without any significant shift in the level of imports. 374 A third area of opportunity is the likely positive impacts of greater resource and energy efficiencies on both energy and non-energy unit costs. Hence, even while Luxembourg can benefit from cost-effective reductions in energy and other resources, the remaining resource requirements consumption will benefit from lower total cost. For example, as suggested in Table 4, rather than an anticipated cost of €1,330 per kilowatt of a rooftop photovoltaic system in 2015, an expanded market with economies of scales and scope is anticipated to drive the costs down to as low as €660 per kilowatt. In this scenario, a greatly expanded market can drive further material and design innovations that can lower other costs as well. A related fourth area of benefit is the prospective of greater productivity which can expand economic opportunity even given the same level of resource consumption. As an example here, Luxembourg’s GDP in 2014 was an estimated €49.4 billion. Had the larger productivity of the nation’s economy been just 0.5 percent higher over the period 2000 through 2014, Luxembourg’s GDP would have been €3.6 billion larger. Again, checking Figure 1 on the jobs per million Euro, a €3.6 billion gain in that higher productivity would have led to higher employment of about 35,000 jobs (all else 374 This example is intended to show only the relative impacts of increasing the local production of Luxembourg’s energy needs. There are other interactions that will affect, either up or down, the actual net impacts of these changed purchase patterns. Among these other drivers are the actual mix of energy resources that are produced locally, the amount of capital borrowed from Luxembourg versus European or other investors, the scale of homegrown ancillary services necessary to support local production, and the magnitude of local wages versus outside employment or contractor support services. 428

Third Industrial Revolution Consulting Group being equal). In effect, €3.6 billion is 3,600 million times 9.8 jobs per million Euro which equals 35,000 more jobs. A fourth and fifth set of impacts include managing the disruption in the availability of energy and other resources while also minimizing the unexpected effects of price volatilities. As the demand for goods and services is reduced in Luxembourg, the EU-28 and the global market more generally, compared to the desired or necessary levels of jobs and incomes, and especially the need for imported resources is reduced, the Luxembourg markets will enjoy reduced exposure and therefore a greater certainty in the availability of resources. Finally, the seventh major driver of greater employment and economic benefits that are likely to follow from the TIR Innovation Scenarios is the continuous learning and encouragement which will catalyze greater innovations, whether the development and deployment of new general purpose technologies, or the innovative changes in business models that can satisfy social, economic, and environmental needs within the Grand Duchy of Luxembourg. Figure 2, immediately below, provides a conceptual framework that helps pull the TIR Master Plan and Innovation Scenario into a useful perspective. While we cannot know at this time either the scale of the stimulus, the productive impact of the many positive collaborations that will be necessary, or the precise outcomes that might result from such innovations, we can offer a positive general explanation of how multiple benefits are likely to emerge through the TIR Master Planning Process. Figure 2. Conceptual Framework for Evaluating TIR Innovation Scenarios Source: John A. “Skip” Laitner (May 2016). 429

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